CAS Exam 5 Spring 2018, Question 26
Study guide: Exam 5
The following table summarizes the results of various claim projection techniques as of December 31, 2017 in total for all accident years:
| Projection Technique | Ultimate Claims Estimate |
|---|---|
| Reported Development | $6,500 |
| Paid Development | $4,800 |
| Expected Claims | $4,900 |
| Reported Bornhuetter-Ferguson | $6,100 |
| Paid Bornhuetter-Ferguson | $4,850 |
| Reported Berquist-Sherman | $4,900 |
| Paid Berquist-Sherman | $4,850 |
- There are no large losses.
Part a (0.5 points)
Describe how an operational change could be causing the variation in the ultimate claims estimates.
Part b (1 point)
Identify and briefly describe how two diagnostics could indicate the presence of the operational change identified in part a. above.
Part c (0.5 points)
Identify and briefly describe a diagnostic that highlights the similarity between the paid development technique and paid Berquist-Sherman technique estimates.
Answer this question and see the worked solution